SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ X ] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SOUTH ALABAMA BANCORPORATION, INC.
__________________________________________
(Name of Registrant as Specified in its Charter)
N/A
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any party of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
South Alabama Bancorporation, Inc.
Post Office Box 3067
Mobile, Alabama 36652
Telephone 334/431-7800
F. MICHAEL JOHNSON
CHIEF FINANCIAL OFFICER
AND SECRETARY
To the Stockholders of
South Alabama Bancorporation, Inc.
NOTICE IS HEREBY GIVEN that, pursuant to call of its Directors, the
Annual Meeting of the Stockholders of South Alabama Bancorporation, Inc. will
be held at 100 St. Joseph Street, Mobile, Alabama, on May 13, 1999, at 10:00
a.m., C.D.T., for the purpose of considering and voting upon the following
matters:
1. Election of Directors. Election as directors of the nineteen nominees
named in the enclosed Proxy Statement.
2. Amendment of Articles of Incorporation to Increase the Authorized
Shares of Common Stock. Amendment of the company's Articles of Incorporation
to increase the number of authorized shares of Common Stock, $.01 par, to
20,000,000.
3. Amendment of the 1993 Incentive Compensation Plan. Amendment of the
company's 1993 Incentive Compensation Plan to increase the number of shares of
Common Stock reserved for issuance under the plan from 300,000 shares to
450,000 shares.
4. Other Business. Transaction of such other business as may be brought
before the meeting or any adjournment thereof. Management currently knows of
no other business to be presented.
Only those stockholders of record at the close of business on March 24,
1999, shall be entitled to notice of and to vote at the meeting.
We hope very much that you will attend the meeting, but, whether you plan
to attend or not, we would appreciate your signing and returning the enclosed
Proxy. Should you attend the meeting in person, the Proxy can be revoked at
your request.
Management sincerely appreciates your support and cooperation, and we
earnestly solicit your continued help during 1999.
By Order of the Board of Directors,
F. Michael Johnson
Chief Financial Officer
and Secretary
NOTICE: YOUR PROXY FORM AND RETURN ENVELOPE ARE INSIDE THIS ENVELOPE.
SOUTH ALABAMA BANCORPORATION, INC.
100 St. Joseph Street, Mobile, Alabama 36602
PROXY STATEMENT
Annual Meeting, May 13, 1999, 10:00 a.m., C.D.T.
This Proxy Statement and the enclosed Proxy are being mailed on April 13,
1999, to stockholders of South Alabama Bancorporation, Inc. ("South Alabama")
in connection with the solicitation of proxies by the Board of Directors of
South Alabama for use at the Meeting of Stockholders on May 13, 1999, and any
adjournment thereof.
South Alabama is the parent company and owner of 100% of the stock of
South Alabama Bank, formerly The Bank of Mobile (the "Mobile Bank"),
headquartered in Mobile, Alabama, First National Bank, Brewton (the "Brewton
Bank"), located in Brewton, Alabama, The Monroe County Bank (the "Monroeville
Bank"), headquartered in Monroeville, Alabama, South Alabama Trust Company,
Inc. (the "Trust Company"), headquartered in Mobile, Alabama and The
Commercial Bank of Demopolis (the "Demopolis Bank"), headquartered in
Demopolis, Alabama.
PROPOSED MERGER WITH SWEET WATER STATE BANCSHARES
On October 26, 1998 South Alabama entered into an agreement in
principle with Sweet Water State Bancshares, Inc. ("Sweet Water"), the
parent corporation of Sweet Water State Bank, to merge Sweet Water with and
into South Alabama whereupon Sweet Water State Bank will become a wholly owned
subsidiary of South Alabama. Holders of Sweet Water common stock will receive
14.17 shares of South Alabama common stock in exchange for each share of Sweet
Water stock which they hold at the time of the merger, assuming the market
value of a share of South Alabama's stock immediately prior to the merger is
from $13.00 to $17.00. If the market value of South Alabama stock at the time
of the merger is above $17.00 or below $13.00, the exchange ratio will vary in
accordance with a predetermined formula. The merger is subject to approval by
various regulatory agencies and by the stockholders of Sweet Water.
VOTING SECURITIES
South Alabama's only class of stock outstanding is its Common Stock, $.01
par. All stockholders of record at the close of business March 24, 1999, will
be entitled to vote their shares on any matter brought before the meeting. The
number of shares of South Alabama Common Stock outstanding on March 24, 1999,
was 7,729,425. Each share is entitled to one vote. Cumulative voting is not
permitted in the election of directors.
Security Ownership of Directors,
Nominees, 5% Stockholders and Officers
The only person known to beneficially own more than 5% of South Alabama's
outstanding Common Stock is Thomas E. McMillan, Jr. The tabulation below
reflects the number of shares beneficially owned by (i) Thomas E. McMillan,
Jr.; (ii) each director and nominee of South Alabama; (iii) the executive
officers named in the Summary Compensation Table; and (iv) the directors and
officers of South Alabama as a group.
<TABLE>
Number of Shares and Nature of
Beneficial Ownership as of March 24, 1999(1)
<CAPTION>
Voting/Investment Power Percentage
Name of Beneficial Owner or Group of Total
(and Address of 5% Stockholders) Sole Shared Aggregate Outstanding(2)
<S> <C> <C> <C> <C>
Thomas E. McMillan, Jr(3) 103,805(4) 309,459(5) 413,264 5.34%
(P.O. Box 809, Brewton, AL 36427)
John B. Barnett, III 113,568 63,980(6) 177,548 2.29
Stephen G. Crawford 84,000 39,950(7) 123,950 1.60
Haniel F. Croft 13,743(8) 0 13,743 .17
David C. De Laney 19,500 29,550(9) 49,050 .63
Lowell J. Friedman 110,299 3,000(10) 113,299 1.46
Broox G. Garrett, Jr. (11) 6,541 81,029(12) 87,570 1.13
W. Dwight Harrigan 188,250 30,000(13) 218,250 2.82
James P. Hayes, Jr . 5,115 37,618(14) 42,733 .55
Clifton C. Inge (15) 37,950 0 37,950 .49
W. Bibb Lamar, Jr . 79,357(16) 1,342(17) 80,699 1.02
Richard S. Manley 23,310 0 23,310 .30
Kenneth R. McCartha 3,000 0 3,000 .03
J. Richard Miller, III (18) 167,913(19) 3,750(20) 171,663 2.22
Harris V. Morrissette(15) 15,804 0 15,804 .20
J. Stephen Nelson 43,921(21) 592(22) 44,513 .56
Paul D. Owens, Jr.(3) 71,092 240,880(23) 311,972 4.03
Earl H. Weaver (11)(18) 59,421 49,788(24) 109,209 2.46
A.G. Westbrook 16,356 30,338(25) 46,694 .60
All directors and officers of
of South Alabama as a
group (23 persons) 1,233,360 748,842 1,982,202(26) 25.16%
(1) The number of shares reflected encompasses shares that, under
applicable regulations, are deemed to be beneficially owned. Shares deemed to
be beneficially owned, under those regulations, include shares as to which,
through any contract, relationship, arrangement, understanding, or otherwise,
either voting power or investment power is held or shared directly or
indirectly. Shares deemed to be beneficially owned also include shares which
may be acquired within sixty days. The total number of shares beneficially
owned is broken down, when applicable, into the following two categories: (i)
shares as to which voting power/investment power is held solely; and (ii)
shares as to which voting power/investment power is shared. The percentage
calculation is based on the aggregate number of shares beneficially owned.
(2) The percentage calculations for Mr. Nelson, Mr. Lamar and Mr. Croft
assume that all 106,038 shares subject to their exercisable outstanding
options at March 24, 1999, were outstanding. The percentage calculation for
all directors and officers of South Alabama, as a group, assumes that all
146,538 shares subject to exercisable outstanding options at March 24, 1999,
were outstanding.
(3) Mr. McMillan and Mr. Owens are brothers-in-law.
(4) Includes 44,400 shares owned by Thomas, Ltd., a limited partnership.
Mr. McMillan is managing general partner of the partnership.
(5) Includes 172,434 shares owned by McMillan, Ltd., a limited
partnership of which Mr. McMillan is a managing partner, and 108,054 shares
and 28,971 shares owned by Mr. McMillan as co-trustee under the wills of his
grandmother and grandfather, respectively.
(6) Includes 9,232 shares owned by Mr. Barnett's wife and 54,748 shares
held by Mr. Barnett as co-trustee of three separate irrevocable trusts for his
three children. Mr. Barnett disclaims beneficial ownership of these shares.
(7) Includes 32,500 shares owned by the trustee of Mr. Crawford's
self-directed subaccount of his law firm's retirement plan. The figure also
includes the following shares as to which Mr. Crawford disclaims any actual
beneficial ownership: 4,500 shares owned by Mr. Crawford as trustee for two of
his children; 1,700 shares owned by his wife; and 1,250 shares owned by his
wife as custodian for two of his children under the Uniform Transfers to
Minors Act.
(8) Includes 10,500 shares subject to purchase within 60 days pursuant to
options granted to Mr. Croft, as to which he would have sole voting and
investment power.
(9) All such shares are owned by the trustee of Mr. De Laney's employer's
retirement plan. Mr. De Laney may be deemed to share voting and investment
power with respect to those shares.
(10) Includes 3,000 shares owned by Mr. Friedman's wife, as to which
shares he may be deemed to share voting and investment power.
(11) Mr. Garrett and Mr. Weaver are first cousins.
(12) Includes 4,070 shares owned by Mr. Garrett as custodian for two
children under the Alabama Uniform Transfers to Minors Act, 67,233 shares
owned by him as trustee of the Broox G. Garrett Family Trust and 9,726 shares
owned jointly with his wife.
(13) All such shares are owned by Mr. Harrigan's wife as trustee of two
separate trusts of which Mr. Harrigan's children are the beneficiaries. Mr.
Harrigan may be deemed to share voting and investment power with respect to
those shares.
(14) All such shares are owned by Mr. Hayes as co-trustee of the
Elizabeth Brannon Hayes Marital Trust.
(15) Mr. Inge is Mr. Morrissette's uncle.
(16) Includes 54,000 shares subject to purchase within 60 days pursuant
to options granted to Mr. Lamar, as to which he would have sole voting and
investment power.
(17) Includes 1,125 shares owned by Mr. Lamar as custodian under the
Uniform Transfers to Minors Act and 217 shares owned by his wife through her
self-directed IRA account.
(18) Mr. Miller is Mr. Weaver's wife's first cousin.
(19) Includes 167,178 shares owned by Miller Investments, a general
partnership. Mr. Miller is Managing Partner of the partnership.
(20) All such shares are owned by Mr. Miller as trustee of two separate
trusts of which Mr. Miller's children are the beneficiaries.
(21) Includes 41,538 shares subject to purchase within 60 days pursuant
to options granted to Mr. Nelson, as to which he would have sole voting and
investment power.
(22) All such shares are owned by Mr. Nelson's wife.
(23) Includes 172,434 shares owned by McMillan, Ltd., a limited
partnership of which Mr. Owens is a managing partner, 53,100 shares owned as
trustee of two revocable management trusts for his daughters, 6,264 shares
owned jointly with his wife and 9,082 shares owned by his wife.
(24) Includes 41,547 shares owned by Mr. Weaver's wife as to which Mr.
Weaver disclaims any actual beneficial ownership and 8,241 shares owned
jointly with his wife.
(25) Includes 7,063 shares owned by Mr. Westbrook's wife as to which Mr.
Westbrook disclaims any actual beneficial ownership and 23,275 shares owned
jointly with his wife.
(26) Includes 146,538 shares subject to purchase within 60 days pursuant
to options granted to officers of South Alabama, as to which they would have
sole voting and investment power.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that South
Alabama's directors and executive officers, and persons who own more than ten
percent of South Alabama's common stock, file with the Securities and Exchange
Commission reports relating to their ownership and changes in ownership of
common stock and other equity securities of South Alabama. Management
believes, based solely upon information furnished to South Alabama and written
representations that no other reports were required, that all persons subject
to the reporting requirements of Section 16(a) during 1998 filed the reports
on a timely basis.
ELECTION OF DIRECTORS
Number and Term
The Bylaws of South Alabama provide that the number of directors to be
elected at the Annual Meeting will be fixed by resolution of the Board of
Directors. The Board has adopted a resolution fixing at nineteen the number of
directors to be elected at the 1999 Annual Meeting. The directors so elected
will serve a term of one year.
Nominees
The persons named below are the Board's nominees for election as
directors, and each has agreed to serve if elected. All nominees are members
of the current South Alabama Board of Directors.
John B. Barnett, III
A South Alabama director since 1996
Mr. Barnett, age 46, has been Executive Vice President since 1996 of South
Alabama, Chairman since 1994, and a director since 1983, of the Monroeville
Bank and a director since 1998 of the Trust Company. Mr. Barnett is a member
of the law firm of Barnett, Bugg, Lee & Holzborn, L.L.C., Monroeville,
Alabama, and has practiced law since 1983. From 1989 to 1994 Mr. Barnett was
Vice Chairman of the Monroeville Bank. From 1983 until its merger with South
Alabama, Mr. Barnett served as Vice President and a director of the
Monroeville Bank's holding company.
Stephen G. Crawford
A South Alabama director since 1985
Mr. Crawford, age 59, a member of the law firm Hand Arendall, L.L.C., Mobile,
Alabama, has practiced law since 1964. Mr. Crawford has been a director of
the Mobile Bank since 1986 and a director since 1998 of the Trust Company.
Haniel F. Croft
A South Alabama director since 1996
Mr. Croft, age 58, has been President since 1979, Chief Executive Officer
since 1988, and a director since 1972, of the Monroeville Bank. From 1982
until its merger with South Alabama, Mr. Croft served as Vice President and a
director of the Monroeville Bank's holding company.
David C. De Laney
A South Alabama director since 1985
Mr. De Laney, age 51, is President of First Small Business Investment
Company of Alabama, Mobile, Alabama, a position he has held since 1978. Mr. De
Laney has been a director of the Mobile Bank since 1986.
Lowell J. Friedman
A South Alabama director since 1986
Mr. Friedman, age 69, has been President of Creola Investment
Corporation, Mobile, Alabama, a land and timber holding company, since 1975.
Mr. Friedman also directs personal investments in real estate and oil and
gas properties. Mr. Friedman has been a director of the Mobile Bank since
1986.
Broox G. Garrett, Jr.
A South Alabama director since 1993
Mr. Garrett, age 50, is an attorney and partner in the law firm of
Thompson, Garrett and Hines, L.L.P., Brewton, Alabama, where he has been
employed since 1973. Mr. Garrett has been a director of the Brewton Bank since
1983 and a director of the Trust Company since 1998.
W. Dwight Harrigan
A South Alabama director since 1997
Mr. Harrigan, age 61, has alternated annually, since 1983, as President
and Executive Vice President of Scotch Lumber Company, Fulton, Alabama. Mr.
Harrigan has also served, since 1987, as Chairman of Harrigan Lumber Company,
Monroeville, Alabama. Mr. Harrigan has been a director of the Mobile Bank
since 1986.
James P. Hayes, Jr.
A South Alabama director since 1993
Mr. Hayes, age 51, is Revenue Commissioner for the State of Alabama, a
position he has held since 1999. Mr. Hayes is also a financial consultant
and has served as President of J.P. Hayes & Company, Inc., Birmingham,
Alabama, since 1985. Mr. Hayes has served since 1985 as a director of the
Brewton Bank.
Clifton C. Inge
A South Alabama director since 1985
Mr. Inge, age 62, has been Chairman of the Board since 1991 of Willis Corroon
Corporation of Mobile, Mobile, Alabama, a subsidiary of Willis Corroon Group
PLC, insurance brokers. Mr. Inge has been a director of the Mobile Bank since
1986 and a director of the Trust Company since 1998.
W. Bibb Lamar, Jr.
A South Alabama director since 1989
Mr. Lamar, age 55, has been President, Chief Executive Officer and a director
of South Alabama since 1989 and Chairman since 1998, Chief Executive Officer
and a director since 1989 of the Mobile Bank. Mr. Lamar has also been a
director of the Trust Company since 1998. Mr. Lamar served as President of
the Mobile Bank from 1989-1998.
Richard S. Manley
A South Alabama director since 1999
Mr. Manley, age 66, is a partner in the law firm of Manley, Traeger,
Perry & Stapp, Attorneys, Demopolis, Alabama, where he has practiced law since
1958. Mr. Manley has served as a director of the Demopolis Bank since
1985.
Kenneth R. McCartha
A South Alabama director since 1997
Mr. McCartha, age 61, retired in 1996 as Superintendent of Banks, State
of Alabama Banking Department, a position he held by gubernatorial
appointment from 1993 until his retirement.
Thomas E. McMillan, Jr.
A South Alabama director since 1985
Mr. McMillan, age 50, has been President of the general partner of
Smackco, Ltd., Brewton, Alabama, a limited partnership engaged in oil and gas
development, since 1974. Mr. McMillan has been a director of the Brewton Bank
since 1977.
J. Richard Miller, III
A South Alabama director since 1991
Mr. Miller, age 52, has been managing partner since 1992 of Miller
Investments, a Brewton, Alabama partnership engaged in private investments.
Mr. Miller has been a director of the Brewton Bank since 1990 and a director
of the Mobile Bank since 1991.
Harris V. Morrissette
A South Alabama director since 1997
Mr. Morrissette, age 39, has been president of Marshall Biscuit Company,
Inc., Mobile, Alabama, since 1994 and has also served as Chairman of Azalea
Aviation, Inc. since 1993. Mr. Morrissette has been a director of the Mobile
Bank since 1990.
J. Stephen Nelson
A South Alabama director since 1993
Mr. Nelson, age 61, has been Chairman since 1993 of South Alabama
and Chairman, since 1993, and a director, since 1979, of the Brewton Bank and
has also been a director of the Trust Company since 1998. Mr. Nelson served as
Chief Executive Officer of the Brewton Bank from 1984-1998.
Paul D. Owens, Jr.
A South Alabama director since 1997
Mr. Owens, age 53, is an attorney in the private practice of law in
Brewton, Alabama, where he has practiced since 1970. Mr. Owens has been a
director of the Mobile Bank since 1986.
Earl H. Weaver
A South Alabama director since 1993
Mr. Weaver, age 60, has been the sole proprietor of Earl H. Weaver
Management Services, a timber, oil, gas and general management concern,
since 1979. Mr. Weaver has served since 1981 as a director of the Brewton
Bank and since 1998 as a director of the Trust Company.
A.G. Westbrook
A South Alabama director since 1999
Mr. Westbrook, age 69, has been Chairman of the Demopolis Bank since 1977
and a director since 1968. Mr. Westbrook served as President and Chief
Executive Officer of the Demopolis Bank from 1969-1995.
Although the Board of Directors does not contemplate that any nominee
named on pages 5-7 will be unavailable for election, if vacancies occur
unexpectedly, the shares covered by the Proxy will be voted for the Board's
substitute nominees, if any, or in such other manner as the Board of Directors
deems advisable.
The Bylaws of South Alabama permit the Board of Directors, between annual
meetings of stockholders, to increase the membership of the Board and to fill
any position so created and any vacancy otherwise occurring. Any new director
so elected holds office until the next annual stockholders' meeting.
DIRECTOR COMMITTEES AND ATTENDANCE
The South Alabama Board of Directors held six meetings during 1998. The
Board has the following standing committees: Executive, Audit and
Personnel/Compensation. The Executive Committee (whose members presently are
Messrs. Barnett, Crawford, Friedman, Lamar, McMillan, Miller, Nelson and
Weaver) between meetings of the Board may exercise all powers of the Board
except as limited by the Bylaws. Actions taken by the Executive Committee are
subject to ratification by the Board at its next regular meeting. The
committee had one meeting in 1998.
The Audit Committee (whose members presently are Messrs. De Laney,
Friedman and Garrett) reviews the scope and plan of internal and external
audits, audit results and the adequacy of internal accounting controls and
makes recommendations to the Board on the appointment of outside accountants.
The committee held one meeting in 1998. The Personnel/Compensation Committee
(whose members presently are Messrs. Crawford, Hayes, Inge and McMillan) sets
compensation for officers of South Alabama and certain officers of its
subsidiaries and reviews guidelines within which the subsidiary boards of
directors fix compensation. The committee held two meetings in 1998. During
1998, director Harrigan attended fewer than 75% of the total number of
meetings of the Board of Directors of South Alabama and meetings of committees
of which he was a member.
Each subsidiary has standing committees composed of directors from their
respective Boards. The Mobile Bank, Brewton Bank, Monroeville Bank and
Demopolis Bank all have a Finance (or Loan), Audit and Personnel (or Salary)
Committee. In addition, the Mobile Bank and the Brewton Bank have Directors
Nominating Committees, the Mobile Bank has an Executive Committee, and the
Trust Company has a Trust Audit Committee.
EXECUTIVE COMPENSATION
Compensation
The table below reflects annual compensation for W. Bibb Lamar, Jr., J.
Stephen Nelson, Haniel F. Croft and W. Gaillard Bixler for services rendered
in 1998, 1997 and 1996 to South Alabama, the Mobile Bank, the Monroeville
Bank and the Brewton Bank.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation(1) Long Term Compensation
Awards
Shares Underlying All Other
Name and Principal Position Year Salary($)(2) Bonus($)(3) Options/SARs(4) Compensation($)(5)
<S> <C> <C> <C> <C> <C>
W. Bibb Lamar, Jr. 1998 $141,000 $35,000 11,250 $5,025
CEO, President and Director, 1997 $132,500 $35,000 7,500
South Alabama; CEO, Chairman 1996 $125,000 $30,000 7,500
and Director, Mobile Bank;
Director, Trust Company
J. Stephen Nelson 1998 $133,600 $25,000 7,500 $4,976
Chairman and Director, 1997 $122,000 $25,000 7,500 $6,570
South Alabama; Chairman and 1996 $118,600 $22,000 7,500 $6,742
Director, Brewton Bank;
Director, Trust Company
Haniel F. Croft 1998 $126,000 $12,096 3,000 $4,178
Director, South Alabama; 1997 $122,400 $ 7,013 7,500 $7,470
CEO, President and Director, 1996 $121,600(6) $ 6,068 $7,466
Monroeville Bank
W. Gaillard Bixler 1998 $ 94,617 $13,393 3,000 $3,356
EVP and COO, South Alabama; 1997 $ 88,471 $12,254 3,000 $6,570
CEO, President and Director, 1996 $ 82,270 $11,307 3,000 $6,742
Brewton Bank
(1) Although Messrs. Lamar, Nelson, Croft and Bixler received perquisites and
other personal benefits in the years shown, the value of these benefits did
not exceed in the aggregate the lesser of $50,000 or 10% of their salary and
bonus in any year.
(2) Includes for Mr. Nelson and Mr. Bixler in the years 1997 and 1996 both
salary and $3,600 in director's fees paid by the Brewton Bank.
(3) Represents amounts paid by South Alabama for Mr. Lamar and Mr. Nelson,
the Brewton Bank Incentive Compensation Plan for Mr. Bixler and the Monroeville
Bank Performance Compensation Plan for Mr. Croft.
(4) All stock options shown have been adjusted for the 3 for 2 stock split.
(5) Represents employer contributions to the South Alabama Profit Sharing Plan
for all officers listed in 1998; in 1997 and 1996, represents employer
contibutions to the Brewton Bank Profit Sharing Plan for Mr. Nelson and Mr.
Bixler and the Monroeville Bank Profit Sharing Plan for Mr. Croft.
(6) Includes $20,400 paid for services to South Alabama from the date of the
merger of the Monroeville Bank's holding company with South Alabama.
Stock Options
</TABLE>
The following table sets forth the grant of stock options during 1998 to
Mr. Lamar, Mr. Nelson, Mr. Croft and Mr. Bixler. All stock options shown have
been adjusted for the 3 for 2 stock split paid in June 1998.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential
Number of % of Total Realizable Value
Shares Options/SARs Assuming Rates of
Underlying Granted to Exercise Stock Price
Options/SARs Employees or Base Expiration Appreciation(1)
Name Granted in Fiscal Year Price ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
W. Bibb Lamar, Jr. 11,250(2) 22.84% $15.7917 01/07/08 $132,497 $362,129
J. Stephen Nelson 7,500(2) 15.22% $15.7917 01/07/08 $ 88,330 $241,418
Haniel F. Croft 3,000(2) 6.09% $15.7917 01/07/08 $ 35,331 $ 96,564
W. Gaillard Bixler 3,000(2) 6.09% $15.7917 01/07/08 $ 35,331 $ 96,564
(1) Calculated by comparing the exercise price of such options and the market
value of the shares of common stock subject to such options, assuming the
market price of such shares increases by 5% and 10%, respectively, over the
term of the options.
(2) Incentive Stock Options which became exercisable on January 7, 1999.
</TABLE>
The following table includes information with respect to unexercised
options held by Mr. Lamar, Mr. Nelson, Mr. Croft and Mr. Bixler. All options
shown have been adjusted for the 3 for 2 stock split.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<CAPTION>
Number of Shares Underlying Value of Unexercised
Unexercised Options/SARs Held At In-the-Money Options/SARs At
December 31, 1998 (#) December 31, 1998 ($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
W. Bibb Lamar, Jr . 7,500 11,250 $ 48,126 $(6,094)
7,500 $ 46,875
7,500 $ 49,375
9,000 $ 59,250
11,250 $101,054
J. Stephen Nelson 7,500 7,500 $ 48,126 $(4,062)
7,500 $ 46,875
7,500 $ 49,375
11,538 $ 75,958
Haniel F. Croft 7,500 3,000 $ 48,126 $(1,625)
W. Gaillard Bixler 3,000 3,000 $ 19,251 $(1,625)
3,000 $ 18,750
4,500 $ 29,625
7,500 $ 49,375
(1) Based on the average of the closing bid and ask prices quoted in the
NASDAQ inter-dealer system on December 31, 1998, minus the exercise price.
</TABLE>
Pension Plans
South Alabama maintains a pension plan and certain other long-term
compensation plans, as described below.
The following table reflects estimated annual benefits payable under the
Retirement Plan for Employees of South Alabama (the "South Alabama Plan") in
effect as of December 31, 1998 at various salary and years of service levels,
assuming retirement at age 65.
<TABLE>
PENSION PLAN TABLE
Compensation Years of Credited Service
<CAPTION>
10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
25,000 2,500 3,750 5,000 6,250 7,500 8,750
50,000 5,000 7,500 10,000 12,500 15,000 17,500
75,000 7,500 11,250 15,000 18,750 22,500 26,250
100,000 10,000 15,000 20,000 25,000 30,000 35,000
125,000 12,500 18,750 25,000 31,250 37,500 43,750
150,000 15,000 22,500 30,000 37,500 45,000 52,500
175,000* 15,000 22,500 30,000 37,500 45,000 52,500
*Maximum Compensation for 1998 under IRC 401(a)(17) is $160,000.
</TABLE>
The amounts reflected are single life benefits computed under the South
Alabama Plan's basic formula. The South Alabama Plan provides generally for a
monthly benefit commencing at age 65 equal to 1% of the employee's average
monthly base compensation during the highest 5 consecutive calendar years out
of the 10 calendar years preceding retirement, multiplied by years of credited
service, not to exceed 40 years. Alternative plan formulas which may apply to
certain participants who participated in predecessor pension plans, might
produce a greater benefit in some situations. Joint and survivor benefits
would be less. Social Security benefits do not affect payments made under the
South Alabama Plan. As of December 31, 1998, Mr. Lamar was credited with 10
years of service, Mr. Nelson was credited with 19 years of service, Mr. Croft
was credited with 29 years of service and Mr. Bixler was credited with 10
years of service.
The Mobile Bank. The Mobile Bank maintains an unfunded and unsecured
Supplemental Retirement Plan (the "Supplemental Plan") designed to supplement
the benefits payable under the South Alabama Plan for certain key employees
selected by the Mobile Bank's Board of Directors. Each participant was a
participant in a pension plan of another bank prior to his employment by the
Mobile Bank, and the Supplemental Plan is designed to afford the participant
the same pension he would receive under the South Alabama Plan if he were
given years-of-service credit as if he were employed by the Mobile Bank his
entire banking career, reduced by benefits actually payable to him under the
South Alabama Plan and any retirement benefit payable to him under any such
plan of another bank. Benefits for total and permanent disability are
supplemented in the same manner.
Because the Supplemental Plan is intended to complement benefits
otherwise available to the participants, the exact amounts to be paid, if any,
to any participant, including Mr. Lamar, cannot be determined until retirement
or disability. Management of the Mobile Bank does not believe any current
expense and any liabilities associated with the Supplemental Plan are
material.
Savings and Profit Sharing Plan. South Alabama maintains the South
Alabama Bancorporation Savings & Profit Sharing Plan. Subject to certain
employment and vesting requirements, all South Alabama personnel are permitted
to participate in the plan. An eligible employee may defer up to 10% of his
or her pay into the plan. The employer makes a matching contribution as
follows: $1.00 for $1.00 on the first 2%, $0.75 for $1.00 on the next 2% and
$0.50 for $1.00 on the next 2%. If an employee defers 6% of pay, that
employee would receive a 4.5% matching contribution. At the beginning of each
year the South Alabama Board of Directors sets the profit sharing goal and at
the end of the year the Board of Directors determines the amount of the profit
sharing contribution to be made. The profit sharing contribution is allocated
to each eligible employee based on an individual compensation to total
participant compensation ratio.
The Demopolis Bank. The Demopolis Bank maintains The Commercial National
Bank of Demopolis 401(k) Profit Sharing Plan. Subject to certain employment
and vesting requirements, all Demopolis Bank personnel are permitted to
participate. At the end of each year, the profit sharing contribution,
determined by the Demopolis Bank Board of Directors, is allocated among the
profit sharing accounts of the eligible participants. Subject to the Actual
Contribution Percentage limitations, the Demopolis Bank may make Employer
Matching Contributions in an amount approved by the Board of Directors.
Change in Control Compensation Agreements
The Mobile Bank entered into a Change in Control Compensation Agreement
with Mr. Lamar on November 14, 1995. The Brewton Bank entered into Change in
Control Compensation Agreements with Mr. Nelson and Mr. Bixler on November 29,
1995. The Monroeville Bank entered into a Change in Control Compensation
Agreement with Mr. Croft on March 31, 1997. These Change in Control
Compensation Agreements (the "Agreements") provide that if Mr. Lamar, Mr.
Nelson, Mr. Bixler or Mr. Croft, are terminated other than for "cause" (as
defined), following a change in control, or if their assigned duties or
responsibilities are diminished such that they are inconsistent with their
present positions, they shall be entitled to receive a cash payment equal to
three times their average annual earnings (as defined), in the case of Mr.
Lamar and Mr. Nelson, two times average annual earnings in the case of Mr.
Croft and one and one-half times average earnings in the case of Mr. Bixler.
Certain other existing employee benefits may also be available to each of Mr.
Lamar, Mr. Nelson, Mr. Croft and Mr. Bixler under terms of these Agreements
for a period after termination of three years for Mr. Lamar and Mr. Nelson and
eighteen months for Mr. Croft and Mr. Bixler. The Agreements automatically
renew each calendar year unless terminated by the Mobile Bank, the Brewton
Bank or the Monroeville Bank at least 90 days prior to any December 31.
Compensation of Directors
South Alabama directors who are not officers are paid a $1,500 annual
retainer, $400 for each Board meeting attended and $200 for each committee
meeting attended.
Five Year Total Stockholder Return Comparison
The following indexed graph compares South Alabama's five-year cumulative
total stockholder return with the NASDAQ Market Index and with a published
peer group industry index, prepared by Media General Financial Services,
comprised of bank holding companies in the southeast regional section of the
United States. The comparison assumes the investment of $100 on December 31,
1993, with dividends reinvested quarterly through December 31, 1998. Returns
of each component issuer have been weighted according to that issuer's market
capitalization.
Graph here
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
SOUTH ALABAMA BANCORPORATION $100 $106.14 $119.35 $118.62 $240.81 $225.27
MGFS SOUTHEAST REGIONAL BANKS 100 98.95 146.35 186.82 323.28 307.89
NASDAQ MARKET INDEX 100 104.99 136.18 169.23 207.00 291.96
</TABLE>
Report of Personnel/Compensation Committee of the Board of Directors
General Policies
The Personnel/Compensation Committee of the Board of Directors of South
Alabama (the "Committee") has responsibility for recommending to the Board the
salaries and bonuses of all South Alabama officers. Additionally, the
Committee has oversight responsibility with respect to the compensation of all
other executive officers of South Alabama's subsidiaries. Other than South
Alabama officers, all other salaries are set at the subsidiary level.
The overall objectives of South Alabama's compensation program are to
attract and retain the best possible banking talent, to motivate its officers
to achieve the goals established in the business strategy, to recognize both
individual contributions and overall business results and to link shareholder
and executive interests through long term equity-based plans.
Base Salary. Except as noted above, executive officer salaries are
reviewed annually by the appropriate subsidiary personnel committee.
Individual salaries are set only after consideration of the officer's level of
responsibility, experience and individual performance, and review of external
competitive practices. In order to determine external competitive practices,
the personnel committees review, and expect to continue to review, salary
surveys conducted by independent compensation consulting firms. In
establishing the base salaries for the executive officers, the personnel committ
ees consider the results of such surveys, but may establish the base salary
for executives above or below the averages indicated in those surveys. The
amounts paid to the Chief Executive Officer and the Chairman of South Alabama,
to the Chief Executive Officer and President of the Monroeville Bank and to
the Chief Executive Officer and President of the Brewton Bank in 1998 are
shown in the Summary Compensation Table under the heading "Annual
Compensation-Salary."
The Mobile Bank Bonus Plan. Based on individual and departmental
performance and net income profitability goals, the Chief Executive Officer of
the Mobile Bank recommends for consideration to the personnel committee of the
Mobile Bank annual bonuses to officers. Consideration is given to the
officer's level of responsibility and the judgment of the Mobile Bank's
personnel committee of that officer's potential contribution to the overall
performance of the Mobile Bank. In 1998 additional consideration was given to
the effect a new savings and profit sharing plan had on officer compensation.
The Brewton Bank Incentive Compensation Plan. Each year the Brewton Bank
establishes a pool of funds equal to 15% of total officers' salaries. Based
upon the performance of the Brewton Bank, the department and the individual,
an officer can earn up to 15% of his or her base salary, payable in a lump sum
after the close of the year. For each officer other than the top two
executives of the Brewton Bank, the formula is based 40% on the Brewton Bank's
achievement of required levels of return on assets, 40% on achievement of
individual and departmental goals as established at the beginning of the year,
and 20% on the results of the officer's annual review as conducted by his or
her supervisor. Each of the two most highly ranked officers automatically
receives the same percentage of his or her total available amount as the
average for all other officers. The amount awarded to the Chief Executive
Officer and President of the Brewton Bank under the Brewton Bank's Incentive C
ompensation Plan for 1998 is set forth in the "Annual Compensation-Bonus"
column of the Summary Compensation Table.
The Monroeville Bank Performance Compensation Plan. The Monroeville Bank
Performance Compensation Plan was designed to maximize long-term shareholder
value by maximizing and balancing long-term profit and growth. After the
budget is completed, senior management meets and sets goals for increases over
the previous year for loan volume, deposit volume, net interest margin,
non-interest income, loan losses and productivity. Each category is weighted
depending on where management feels the need to place the most emphasis for
that year. At the end of the year, if goals are exceeded compensation is paid
to the officers and employees based on the weighted categories and the amount
by which the goals are exceeded. All officers and employees receive the same
percent of their gross annual salary. The amount awarded to the Chief
Executive Officer and President of the Monroeville Bank under the Monroeville
Bank's Incentive Compensation Plan for 1998 is set forth in the "Annual
Compensation-Bonus" column of the Summary Compensation Table.
The Demopolis Bank Bonus Plan. Each year, after a review of the
Demopolis Bank's overall performance, the salary committee of the Demopolis
Bank makes a recommendation to the Board of Directors to pay annual bonuses.
All officers and full-time employees receive $600, and part-time employees
receive a pro-rata share of $600, based on the number of hours worked.
The Trust Company Incentive Compensation Plan. The Trust Company
establishes annually a pool of funds equal to 15% of total trust officers'
salaries. Each trust officer has the opportunity to earn an additional 15% of
his or her annual base compensation, based upon (1) the financial performance
of the company, (2) the individual performance of the officer in achieving his
or her personal goals, and (3) evaluation of the individual officer by his or
her supervisor. All officers are eligible to participate, exclusive of the
Chief Executive Officer of the Trust Company, and payments are made in a
lump sum at the end of each year.
Stock Options. Stock options are South Alabama's and its subsidiaries'
principal long-term incentive vehicle. The Committee believes that stock
options not only motivate and reward executives for exceptional performance,
but also align their goals more closely with those of the South Alabama
stockholders by affording the recipients an opportunity for stock ownership in
South Alabama. The stock option plan is designed to encourage a long-term
perspective by providing a ten-year term, which includes a nine-year exercise
period and a one-year period after the date of grant during which the option
cannot
be exercised.
The number of options awarded to each officer generally is tied to the
officer's level of responsibility, with the result that senior executive
officers typically receive greater awards than other officers. The Committee
takes into consideration previous grants to an individual officer as well as
all other factors.
The shares of the Common Stock covered by options awarded during 1998 to
the Chief Executive Officer and the Chairman of South Alabama, to the Chief
Executive Officer and President of the Monroeville Bank and to the Chief
Executive Officer and President of the Brewton Bank are shown in the table
entitled "Option Grants in Last Fiscal Year," and the options previously
granted and outstanding at year-end are shown in the table entitled "Aggregate
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values."
Other Compensation. Additionally, South Alabama's subsidiaries maintain
broad-based employee benefit plans, including pension plans and 401(k)
savings and profit sharing plans, as described elsewhere in this document in
the section entitled "Pension Plans." Officers of South Alabama participate
in such plans on the same basis as other employees.
Chief Executive Compensation
The Committee meets in executive sessions to review the Chief Executive
Officer's salary and from time to time, but not necessarily annually, consults
with salary administration firms and/or uses compensation surveys with respect
to competitors' practices. Compensation of the Chief Executive Officer is
determined in accordance with the same basic factors as described above for
other executive officers.
The 1998 base salary increase for the Chief Executive Officer was
established after a review of market data from independent compensation
surveys. The Committee is empowered to recommend to the Board the Chief
Executive Officer's base salary in its discretion and without regard to
particular factors. The Committee considered, however, that 1997 corporate
earnings objectives had been exceeded. The Committee also considered the
achievement of certain other strategic objectives, both financial and
otherwise, under his leadership, including acceptable asset quality, capital
ratios, liquidity ratios, interest rate margins and other financial goals.
The 1998 bonus for the Chief Executive Officer for achieving the net
income goal was $35,000, an amount equal to approximately 25% of his 1998
salary. In setting the amount of the bonus, the Committee considered the
continued improvement in the financial performance of South Alabama during the
year as well as the successful attainment of other non-financial related
goals.
The Committee also granted to the Chief Executive Officer options to
purchase 11,250 shares of South Alabama Common Stock, as described in the
table entitled "Option Grants in Last Fiscal Year."
The members of the Committee are as follows: Stephen G. Crawford, James
P. Hayes, Jr., Clifton C. Inge and Thomas E. McMillan, Jr.
CERTAIN TRANSACTIONS AND MATTERS
Some of the directors, executive officers, and nominees for election as
directors of South Alabama, as well as firms and companies with which they are
associated, are and have been customers of its subsidiary banks and as such
have had banking transactions, including loans and commitments to loan, with
subsidiary banks during 1998. These loans and commitments to loan, including
loans and commitments outstanding at any time during the period, were made in
the ordinary course of business on substantially the same terms, including
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and, in the opinion of subsidiary bank
management, did not involve more than the normal risk of collectibility or
present other unfavorable factors.
Stephen G. Crawford, a director and nominee, is a member of the law firm
of Hand Arendall, L.L.C., which serves as counsel for South Alabama and the
Mobile Bank. Broox G. Garrett, Jr., a director and nominee, is a partner in
the law firm of Thompson, Garrett & Hines, L.L.P., which serves as counsel for
the Brewton Bank. John B. Barnett, III, a director, executive officer and
nominee, is a member of the law firm of Barnett, Bugg, Lee & Holzborn, L.L.C.,
which serves as counsel for the Monroeville Bank. Richard S. Manley,
director and nominee, is a partner in the law firm of Manley, Traeger, Perry &
Stapp, which serves as counsel for the Demopolis Bank.
AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE
THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has adopted a resolution to amend South Alabama's
Articles of Incorporation to increase the number of authorized shares of
Common Stock, $.01 par, from 10,000,000 shares to 20,000,000 shares. The
Board has declared the change advisable and recommends that stockholders vote
"FOR" the proposed amendment.
South Alabama's Articles of Incorporation currently authorize issuance of
10,000,000 shares of Common Stock, $.01 par, and 500,000 shares of Preferred
Stock, no par value. At March 24, 1999, 7,729,425 shares of Common Stock were
outstanding, an additional 300,000 shares were allocated for issuance under
the South Alabama Bancorporation 1993 Incentive Compensation Plan (the "1993
Plan"), and 18,750 shares were allocated for issuance under a previous stock
option plan. As of March 24, 1999, there were no shares of Common Stock held
as treasury stock. As of the same date no shares of Preferred Stock were
outstanding. The Board of Directors is empowered, without further action by
the stockholders, to issue the remaining authorized but unissued shares of
Common Stock and to provide for the terms of and to issue the authorized but
unissued shares of Preferred Stock. If the proposed amendment is approved by
the stockholders, the Board of Directors will be empowered, without further
action by the stockholders, to issue an additional 10,000,000 shares of
Common Stock for such purposes and for such consideration as the Board may
approve.
Although South Alabama has no present intention of issuing additional
shares of Common or Preferred Stock, except in connection with the Sweet Water
merger and other than upon the exercise of options granted under the 1993 Plan
and the previous stock option plan, the Board of Directors believes that the
availability of increased shares of Common Stock will provide South Alabama
with needed flexibility in structuring possible future financings and
acquisitions and in meeting other corporate needs that may arise. South
Alabama has sufficient authorized but unissued Common Stock to consummate the
merger mentioned above and to fulfill its obligations under the 1993 Plan and
the previous stock option plan without the approval of this proposed
amendment. In the future, additional authorized shares of Common Stock would
be available for general corporate purposes, including but not limited to
possible issuances as stock dividends or stock splits, in future mergers or
acquisitions, in a future public offering or private placement, or under a
stock benefit plan. The Board of Directors does not intend to issue any
additional shares of Capital Stock except on terms which the Board of
Directors deems to be in the best interests of South Alabama and its
shareholders. Although South Alabama currently has no specific plans,
intentions, arrangements or understandings regarding specific acquisitions,
except as mentioned above, South Alabama expects to consider acquisition
opportunities as they become available in the future.
The authorization of additional shares of Common Stock pursuant to this
proposal will have no dilutive effect upon the proportionate voting power of
the present shareholders of South Alabama. However, to the extent that shares
are subsequently issued to persons other than the present shareholders of
South Alabama, such issuance could have a dilutive effect on the earnings per
share and voting power of present shareholders. If such dilutive effect on
earnings per share occurs, South Alabama expects that any such dilutive effect
would be relatively short in duration.
In addition, although the issuance of shares of Common Stock in certain
instances may have the effect of discouraging or preventing a hostile
takeover, the Board of Directors does not intend or view the increase in
authorized Common Stock as an anti-takeover measure. South Alabama is not
aware of any proposed or contemplated transaction of this type, and this
amendment to the Articles of Incorporation is not being recommended in
response to any specific effort of which South Alabama is aware to obtain
control of South Alabama.
The holders of South Alabama's Common Stock have no preemptive rights to
subscribe to any future issues of the Common Stock.
The approval of the proposed amendment requires the affirmative vote of
the holders of the majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ADOPTION OF THIS PROPOSED AMENDMENT.
AMENDMENT OF THE 1993 INCENTIVE COMPENSATION PLAN TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK IN THE PLAN
The Board of Directors is seeking stockholder approval of an amendment to
the South Alabama 1993 Incentive Compensation Plan (the "1993 Plan"). Certain
information concerning this matter is set forth below. A copy of the 1993
Plan, as amended to date, and the proposed amendment thereto are reproduced
as Appendix A and Appendix B, respectively, to this Proxy Statement. The
descriptions of the 1993 Plan and its proposed amendment are qualified in
their entirety by reference to Appendices A and B, respectively.
The Board of Directors recommends a vote FOR approval of the amendment to
the 1993 Plan under Item 3 on the proxy card. The affirmative vote of the
holders of a majority of the outstanding shares of South Alabama present at
the meeting, assuming a quorum is present, is required for approval of the
amendment to the 1993 Plan. Proxies solicited by the Board of Directors will
be voted FOR the approval of the proposed amendment to the 1993 Plan unless
stockholders specify in their proxies a contrary choice.
Amendment to 1993 Plan
The Board of Directors has adopted an amendment to the 1993 Plan, subject
to approval of the stockholders. The amendment increases from 300,000 to
450,000 the total number of shares of South Alabama Common Stock which are
subject to, reserved for and available for distribution under the 1993 Plan.
In the absence of stockholder approval, the proposed amendment will not take
effect.
Summary Description of the 1993 Plan
The 1993 Plan provides for grants of stock options, stock appreciation
rights and restricted stock awards. It was approved by the stockholders and
put into operation in 1994. In 1997 the number of shares available under the
1993 Plan was increased from 150,000 to 200,000. Due to the 3 for 2 stock
split in 1998, 300,000 shares of South Alabama Common Stock are currently
subject to, reserved for and available for distribution under the 1993 Plan.
The purpose of the 1993 Plan is to provide financial incentives to key
employees who are in positions to make significant contributions for the
long-term success of South Alabama and its subsidiaries. It is designed to
attract individuals of outstanding ability and to encourage key employees to
acquire a proprietary interest in South Alabama, to continue employment with
South Alabama and its subsidiaries and to render superior performance during
their employment. The 1993 Plan replaced the Stock Option Plan of Mobile
National Corporation, pursuant to which no further options were issued once
the 1993 Plan was approved by shareholders. In the event any right or grant
under the 1993 Plan expires, terminates or is forfeited, the number of shares
made subject to the expired or terminated option, grant or award shall again
become available. As of March 24, 1999 the closing bid price per share of
South Alabama Common Stock, as reported on NASDAQ, was $15.00.
The 1993 Plan is administered by the Committee, none of the members of
which are employees of South Alabama or any subsidiary and none of whom
receive or have received within one year prior to service, any options, stock
appreciation rights or restricted stock awards pursuant to the 1993 Plan or
any other similar plan of South Alabama or its subsidiaries. The Committee is
authorized to determine those key employees of South Alabama or its
subsidiaries to whom any options or rights will be granted and the number of
shares of South Alabama Common Stock to be subject to each such option or
right, based upon the nature of the services rendered by the employee, the
employee's potential contribution to the long-term success of South Alabama
and/or one or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. While the determination of
key employees is within the discretion of the Committee, 23 persons were
considered key employees at December 31, 1998.
The 1993 Plan authorizes the Committee to grant (i) Incentive Stock
Options ("ISOs) which are qualified to receive special federal tax treatment
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) Supplemental Stock Options ("SSOs") which are not so qualified,
(iii) Stock Appreciation Rights ("SARs") in tandem with the grant of an SSO,
and (iv) Restrictive Stock Awards ("RSAs") providing for an grant of stock
under various restrictions, all as further described below. As of the date of
the Proxy Statement, the Committee has granted ISOs covering 280,488 shares of
South Alabama Common Stock, the only grants or awards under the 1993 Plan to
date.
The Board of Directors of South Alabama may, without further approval of
stockholders, suspend, terminate or amend the 1993 Plan. However, no such
amendment shall change: (i) the maximum aggregate number of shares of common
stock available under the 1993 Plan, (ii) the option exercise price, (iii) the
maximum period during which Options or SAR's may be exercised, (iv) the
maximum amount which may be paid upon exercise of an SAR, (v) the termination
date of the 1993 Plan to a later date, or (vi) the eligibility requirements
for participation in the 1993 Plan in a material way. Notwithstanding the
foregoing, the Committee may make adjustments in the number of shares of
common stock available for issuance under the 1993 Plan and in the purchase
price per share for the exercise of an Option thereunder to take into account
the effect of any stock dividend, recapitalization, split-up, consolidation,
share exchange, merger, other reorganization or sale of assets undertaken by
South Alabama. This was done in 1998 in connection with the 3 for 2 stock
split.
Stock Options
Grants of all options, including both ISOs and SSOs, under the 1993 Plan
are subject to a number of requirements, including the following: (i) each
option shall be evidenced by an agreement containing terms and conditions
consistent with the 1993 Plan, as the Committee shall determine; (ii) no
option shall be granted under the 1993 Plan on or after the tenth anniversary
of the date of adoption of the plan by the Board of Directors; (iii) no option
shall be exercised prior to the expiration of one year after its grant date;
(iv) no option shall be transferable other than by will or the laws of descent
and distribution; and (v) any such option shall terminate as provided in the
agreement, but not later than the earlier of (a) three months after the
grantee's retirement, (b) one year after the grantee ceases to be employed as
a result of permanent disability or death, or (c) the date on which the
grantee ceases to be employed for any other reason.
In addition, options which are ISOs must meet the following requirements:
(i) the option price must be equal to the fair market value of a share of
South Alabama Common Stock on the date of grant (or 110% of such fair market
value with respect to any individual owning 10% or more of the combined voting
power of all classes of stock of South Alabama); and (ii) the aggregate fair
market value of the Common Stock, as determined on the date of grant, with
respect to which ISOs are exercisable for the first time by any grantee during
any calendar year shall not exceed $100,000.
Stock Appreciation Rights
SARs may be granted in conjunction with any SSO with respect to each
share of South Alabama Common Stock which may be purchased by the exercise of
such SSO. Upon exercise of an SAR, South Alabama shall pay the amount by
which the fair market value of a share of Common Stock on the date of exercise
exceeds the fair market value of a share of Common Stock on the date of
grant. An SAR may be paid in cash, in shares of Common Stock valued at fair
market value on the date of exercise, or partly in cash and partly in such
shares. SARs are exercisable when and to the extent the accompanying SSO is
exercisable, expire simultaneously with the expiration or termination of such
SSO, and may be transferred only when and under the same conditions as the
accompanying SSO is transferrable. The number of SARs is reduced upon each
exercise of the related SSO by the number of SARs which corresponds to the
number of shares of Common Stock purchased pursuant to such exercise;
conversely, exercise of an SAR results in a simultaneous corresponding
reduction in the number of shares of Common Stock available for purchase under
the related SSO.
Restricted Stock Awards
RSAs may be granted by the Committee pursuant to a restricted stock
agreement specifying the number of shares, covered by the RSA and including
(i) such restrictions, conditions and terms as the Committee may determine,
including a requirement of continued employment for a specified period; (ii) a
provision that shares awarded and the rights thereunder shall not be
transferrable during the period of restriction as established by the
Committee; (iii) a provision that the Common Stock so awarded shall bear an
appropriate legend noting the restrictions upon transfer and may, in the
discretion of the Committee, be deposited with South Alabama; and (iv) the
terms and conditions upon which any restrictions placed upon the shares shall
lapse. If a grantee of an RSA ceases to be employed by South Alabama or its
subsidiaries by reason of death, disability or retirement, the Committee will
determine the extent to which the restrictions shall be deemed to have lapsed
by multiplying the number of shares subject to the award by a fraction, the
numerator of which is the number of calendar months the grantee was employed
during the restriction period and the denominator of which is the number of
calendar months in the restriction period. If a grantee ceases to be employed
by South Alabama for any other reason, the grantee shall be deemed not to have
satisfied the restrictions imposed under the RSA unless the Committee
determines otherwise in its sole discretion, in which event the extent to
which the restrictions shall be deemed to hae lapses shall not exceed the
amount determined in accordance with the preceding sentence.
Federal Tax Consequences of Options
Under the provisions of Section 422 of the Code, an employee is not
subject to federal income tax consequences either upon the grant or upon the
exercise of an ISO. Gain or loss is recognized only upon the disposition of
the stock acquired pursuant to the exercise of an ISO, and such gain or loss
generally will constitute long-term capital gain. If the stock so acquired is
disposed of within two years of the date the ISO is granted, or within one
year of the exercise of the ISO, however, such disposition will constitute a
"disqualifying disposition." In the event of a disqualifying disposition, the
difference between the fair market value of the stock at the time of exercise
and the exercise price will be included in ordinary income for the year in
which such disposition takes place. In addition, upon exercise of an ISO the
difference between the fair market value of the stock at the time of exercise
and the exercise price is an item of tax preference for purposes of the
alternative minimum tax applicable to individuals.
South Alabama is not allowed any deduction with respect to an ISO, unless
there is a disqualifying disposition.
The grant of SSOs, or of the accompanying SARs, does not result in any
federal income tax consequences for either the employee or South Alabama.
Upon exercise of an SSO, however, the optionee will realize ordinary income
equal to the difference between the fair market value of the shares purchased
determined as of the date of exercise and the price which the optionee pays
for the shares. Upon exercise of an SAR, the optionee will realize ordinary
income equal to the amount paid by South Alabama upon such exercise. South
Alabama will be entitled to a deduction for federal income tax purposes equal
to the amount which the optionee is required to include in income, subject to
two conditions: (i) the amount taken into income by the employee must
constitute "reasonable compensation" for federal income tax purposes; and (ii)
South Alabama must withhold from employee's income in accordance with
applicable treasury regulations. Any sale or exchange of shares acquired
pursuant to the exercise of an SSO will result in long-term or short-term
capital gain or loss to the optionee, depending upon whether the shares were
held for the applicable holding period.
Plan Benefits
The following table sets forth certain information for the calendar year
1998 concerning the benefits received by or allocated to the four executive
officers named in the summary compensation table above, the executive officers
of South Alabama as a group, directors who are not executive officers as a
group and other employees as a group, under the 1993 Plan:
<TABLE>
NEW PLAN BENEFITS
SOUTH ALABAMA BANCORPORATION 1993 INCENTIVE COMPENSATION PLAN
<CAPTION>
Dollar Value($)(1)
Name and Position 5% 10% Number of Units
<S> <C> <C> <C>
W. Bibb Lamar, Jr. $132,497 $362,129 11,250
CEO, President and Director,
South Alabama; CEO, Chairman
and Director, Mobile Bank;
Director, Trust Company
J. Stephen Nelson $ 88,330 $241,418 7,500
Chairman and Director,
South Alabama; Chairman and
Director, Brewton Bank;
Director, Trust Company
Haniel F. Croft $ 35,331 $ 96,564 3,000
Director, South Alabama;
CEO, President and Director,
Monroeville Bank
W. Gaillard Bixler
EVP and COO, South Alabama; $ 35,331 $ 96,564 3,000
CEO, President and Director,
Brewton Bank
Current Executive Officers
as a Group $326,820 $893,239 27,750
Current Directors who are not
Executive Officers as a Group 0 0 0
Employees, including all current
Officers who are not Executive
Officers, as a Group $253,157 $692,016 21,500
(1) Calculated by comparing the exercise price of such options and the market
value of the shares of common stock subject to such options, assuming the
market price of such shares increases by 5% and 10%, respectively, over the
term of the options.
</TABLE>
APPOINTMENT OF AUDITORS
The Board of Directors of South Alabama, on recommendation of the Audit
Committee, engaged Arthur Andersen LLP as South Alabama's independent
accountant and auditor beginning in 1995. The engagement was entered into on
September 27, 1995. Arthur Andersen will have representatives present at the
annual meeting to respond to appropriate questions and to make a statement if
they so desire.
OTHER MATTERS
Management currently does not know of any other matters to be presented
at the meeting.
If a Proxy in the form enclosed is executed properly and is returned, the
shares represented thereby will be voted in accordance with the directions
given in that Proxy. If no specific directions are given, the shares will be
voted, subject to and in accordance with the provisions herein contained,
"For" the Board of Directors' nominees in the election of directors, "For" the
proposed amendment to the Articles of Incorporation and "For" the proposed
amendment to the 1993 Incentive Compensation Plan. If any other matter is
presented at the meeting, the shares will be voted in accordance with the
recommendations of the Board of Directors. At any time prior to its exercise,
a Proxy may be revoked by written notice or a subsequently dated Proxy
delivered to the Secretary of South Alabama.
Solicitation of proxies will be made initially by mail. In addition,
proxies may be solicited in person, by telephone, and by telegraph by
directors, officers, and other employees of South Alabama and its subsidiary
banks. The cost of printing, assembling, and mailing this Proxy Statement and
related material furnished to stockholders and all other expenses of
solicitation, including the expenses of brokers, custodians, nominees, and
other fiduciaries who, at the request of South Alabama, mail material to or
otherwise communicate with beneficial owners of shares held by them, will be
borne by South Alabama.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum of the stockholders
to take action at the meeting. Once a quorum is established, (i) directors
must be elected by a plurality of the shares of Common Stock present, in
person or by proxy, and (ii) any other action to be taken must be approved
by a majority of the shares of Common Stock present, in person or by proxy.
For voting purposes, abstentions and broker non-votes will in effect count as
"no" votes.
Stockholder proposals intended to be submitted for consideration at the
2000 Annual Meeting of the Stockholders of South Alabama must be submitted in
writing to and received by the Secretary of South Alabama not later than
December 15, 1999 to be included in South Alabama's Proxy Statement and form
of Proxy relating to that meeting. The named proxies for the 2000 annual
meeting will have discretionary voting authority with respect to any
stockholder proposal not received in writing by February 28, 2000, and they
will exercise their authority in accordance with the recommendations of South
Alabama's Board of Directors.
F. Michael Johnson
Chief Financial Officer
and Secretary
Enclosures
April 13, 1999
APPENDIX A
SOUTH ALABAMA BANCORPORATION
1993 INCENTIVE COMPENSATION PLAN
(As amended through December 31, 1998)
ARTICLE I
Purpose, Scope and Administration of the Plan
Section 1.1 Purpose.
The purpose of the 1993 Incentive Compensation Plan (the "Plan") is to
promote the long-term success of South Alabama Bancorporation and its
Subsidiary Corporations by providing financial incentives to key employees who
are in positions to make significant contributions toward such success. The
Plan is designed to attract individuals of outstanding ability to employment
with the Company and its Subsidiary Corporations and to encourage key
employees to acquire a proprietary interest in the Company, to continue
employment with the Company or its Subsidiary Corporations, and to render
superior performance during such employment.
Section 1.2 Definitions.
Unless the context clearly indicates otherwise, for purposes of this
Plan, the following terms have the respective meanings as set forth below:
(a) "Board of Directors" means the Board of Directors of South Alabama
Bancorporation or any successor corporation.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Compensation Committee of the Board of
Directors (or any successor committee thereto), which Committee shall be
composed of not less than three members of the Board of Directors who are not
employees of the Company or of any Subsidiary Corporation of the Company and
who, at the time exercising of discretion in administering the Plan, do not
receive, and have not received at any time within one year prior thereto, any
Options, Stock Appreciation Rights, or Restricted Stock Awards pursuant to the
Plan or any other plan of the Company or of any Subsidiary Corporation of the
Company entitling the participants therein to acquire stock, restricted stock,
stock options, or stock appreciation rights of the Company or of any
Subsidiary Corporation of the Company, except for and excluding formula plans
meeting the conditions of Rule 16b-3(c)(2)(ii) promulgated under the
Securities Exchange Act of 1934.
(d) "Common Stock" means the common stock of South Alabama
Bancorporation, or such other class of shares or other securities to which the
provisions of the Plan may be applicable by reason of the operation of Section
5.1 hereof.
(e) "Company" means South Alabama Bancorporation or any successor
corporation.
(f) "Fair Market Value" of a share of Common Stock on any particular date
means the average between the closing bid and asked prices on the
over-the-counter market, as determined by the Committee, for the business day
next preceding the date of grant; or if no such prices shall have been
reported for such preceding business day, the fair market value shall be
determined in good faith by the Committee to comply with the provisions of
Code Section 422(b)(4).
(g) "Grant Date", as used with respect to a particular Option, Stock
Appreciation Right, or Restricted Stock Award, means the date as of which such
Option, Right, or Award is granted by the Committee pursuant to the Plan.
(h) "Grantee" means the employee to whom an Option, Stock Appreciation
Right, or Restricted Stock Award is granted by the Committee pursuant to the
Plan.
(i) "Incentive Stock Option" means an Option that qualifies as an
incentive stock option as described in Section 422 of the Code.
(j) "Option" means an option granted by the Committee pursuant to Article
II to purchase shares of Common Stock, which shall be designated at the time
of grant as either an Incentive Stock Option or a Supplemental Stock Option,
as provided in Section 2.1 hereof.
(k) "Option Agreement" means the agreement between the Company and a
Grantee under which the Grantee is granted an Option or an Option and Stock
Appreciation Right pursuant to the Plan.
(1) "Option Period" means, (i) with respect to any Incentive Stock Option
granted hereunder, the period beginning on the Grant Date and ending at such
time not later than the tenth annual anniversary of the Grant Date, as the
Committee, in its sole discretion, shall determine, and (ii) with respect to
any Supplemental Stock Option or Stock Appreciation Right granted hereunder,
the period beginning on the Grant Date and ending at such time not later than
the tenth annual anniversary of the date on which the Supplemental Stock
Option or Stock Appreciation Right may first be exercised, as the Committee,
in its sole discretion, shall determine.
(m) "Permanent Disability", as applied to a Grantee, means that the
Grantee (1) has established to the satisfaction of the Committee that the
Grantee is unable to engage in substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
last for a continuous period of not less than 12 months (all within the
meaning of Section 422(c)(6) and Section 22(e)(3) of the Code),and (2) has
satisfied any requirement imposed by the Committee in regard to evidence of
such disability.
(n) "Plan" means the South Alabama Bancorporation 1993 Incentive
Compensation Plan as set forth herein and as amended from time to time.
(o) "Restricted Stock Agreement" means the agreement between the Company
and a Grantee under which the Grantee is granted a Restricted Stock Award
pursuant to the Plan.
(p) "Restricted Stock Award" means an award of Common Stock which is
granted by the Committee pursuant to Article IV and which is restricted
against sale or other transfer in a manner and for a specific period of time
determined by the Committee.
(q) "Restriction Period" means, with respect to any Restricted Stock
Award granted hereunder, the period beginning on the Grant Date and ending at
such time, but not sooner than the first annual anniversary of the Grant Date,
as the Committee, in its sole discretion, shall determine.
(r) "Retirement", as applied to a Grantee, means normal or early
retirement as provided for in the applicable qualified pension plan of the
Company and/or one or more of its Subsidiary Corporations; provided that a
Grantee shall not be deemed to have retired if his employment is terminated by
the Company because of negligence or malfeasance.
(s) "Subsidiary Corporation" of the Company means any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain, within the
meaning of Section 424(f) of the Code.
(t) "Stock Appreciation Right" means a right granted pursuant to Article
III hereof by the Committee, in conjunction with a Supplemental Stock Option,
to receive payment equal to any increase in the Fair Market Value of a share
of Common Stock from the Grant Date to the date of exercise of such right, in
lieu of exercise of the Supplemental Stock Option for such share.
(u) "Supplemental Stock Option" means any Option granted under this Plan,
other than an Incentive Stock Option.
Section 1.3 Aggregate Limitation.
(a) The aggregate number of shares of Common Stock with respect to which
Options, Stock Appreciation Rights, and Restricted Stock Awards may be
granted shall not exceed 300,000 shares of Common Stock, subject to adjustment
in accordance with Section 5.1.
(b) Any shares of Common Stock to be delivered by the Company upon the
grant of Restricted Stock Awards or the exercise of Options or Stock
Appreciation Rights shall, at the discretion of the Board of Directors, be
issued from the Company's authorized but unissued shares of Common Stock or be
transferred from any available treasury stock.
(c) In the event that any Option or Stock Appreciation Right expires or
otherwise terminates prior to being fully exercised, or any Restricted Stock
Award as to which the Grantee received no benefits of ownership of the
underlying Common Stock is forfeited, the Committee may grant new Options,
Stock Appreciation Rights, and Restricted Stock Awards hereunder to any
eligible Grantee for the shares with respect to which the expired or
terminated Option or Stock Appreciation Right was not exercised or which were
forfeited when the terms and conditions of the Restricted Stock Award were not
satisfied.
Section 1.4 Administration of the Plan
(a) The Plan shall be administered by the Committee, which shall have the
authority:
(1) To determine those key employees of the Company and/or its Subsidiary
Corporations to whom, and the times at which, Options, Stock Appreciation
Rights, and/or Restricted Stock Awards shall be granted and the number of
shares of Common Stock to be subject to each such Option, Right, and/or Award,
taking into consideration the nature of the services rendered by the
particular employee, the employee's potential contribution to the long-term
success of the Company and/or one or more of its Subsidiary Corporations and
such other factors as the Committee in its discretion shall deem relevant;
(2) To interpret and construe the provisions of the Plan and to establish
rules and regulations relating to it;
(3) To prescribe the terms and conditions of the Option Agreements for
the grant of Options and Stock Appreciation Rights (which need not be
identical) in accordance and consistent with the requirements of the Plan;
(4) To prescribe the terms and conditions of the Restricted Stock
Agreements (which need not be identical to the terms and conditions of any
Option Agreements) in accordance and consistent with the requirements of the
Plan; and
(5) To make all other determinations necessary or advisable to administer
the Plan in a proper and effective manner.
(b) All decisions and determinations of the Committee in the
administration of the Plan and in response to questions or other matters
concerning the Plan or any Option, Stock Appreciation Right, or Restricted
Stock Award shall be final, conclusive, and binding on all persons, including,
without limitation, the Company, its Subsidiary Corporations, the shareholders
and directors of the Company, and any persons having any interest in any
Options, Stock Appreciation Rights, or Restricted Stock Awards which may be
granted under the Plan.
(c) The authority and power of the Committee hereunder is purely
discretionary and shall not be deemed to be mandatory. No employee or class or
group of employees shall have any right or privilege to demand or require the
granting of any Option, Stock Appreciation Right, or Restricted Stock Award or
the consideration thereof, at any time. All Options, Stock Appreciation
Rights, and Restricted Stock Awards hereunder (if any) shall be granted in the
absolute and unrestricted discretion of the Committee.
Section 1.5 Eligibility for Award.
The Committee shall designate from time to time the key employees of the
Company and/or one or more of its Subsidiary Corporations who are to be
granted Options, Stock Appreciation Rights, and/or Restricted Stock Awards. In
no event may a member of the Committee or any director who is not an employee
of the Company or one of its Subsidiary Corporations be granted an Option,
Stock Appreciation Right, or Restricted Stock Award under this Plan.
Section 1.6 Effective Date and Duration of Plan.
This Plan shall become effective upon its adoption by the Board of
Directors; provided, that any grant of Options, Stock Appreciation Rights, or
Restricted Stock Awards under the Plan prior to approval of the Plan by the
stockholders of the Company is subject to such stockholder approval within
twelve months of adoption of the Plan by the Board of Directors. Unless
previously terminated by the Board of Directors, the Plan (but not any then
outstanding Options, Stock Appreciation Rights, or Restricted Stock Awards
which have not yet expired or otherwise terminated) shall terminate on the
tenth annual anniversary of its adoption by the Board of Directors.
ARTICLE II
Stock Options
Section 2.1 Grant of Options.
(a) The Committee may from time to time, subject to the provisions of the
Plan, grant Options to key employees under appropriate Option Agreements to
purchase shares of Common Stock up to the aggregate number of shares of Common
Stock set forth in Section 1.3(a).
(b) The Committee may designate any Option which satisfies the
requirements of Sections 2.2 and 2.3 hereof as an Incentive Stock Option and
may designate any Option granted hereunder as a Supplemental Stock Option, or
the Committee may designate a portion of an Option as an Incentive Stock
Option (so long as the portion satisfies the requirements of Sections 2.2 and
2.3 hereof) and the remaining portion as a Supplemental Stock Option. Any
portion of an Option that is not designated as an Incentive Stock Option shall
be a Supplemental Stock Option. A Supplemental Stock Option must satisfy the
requirements of Section 2.2 hereof, but shall not be subject to the
requirements of Section 2.3.
Section 2.2 Option Requirements.
(a) An Option shall be evidenced by an Option Agreement specifying the
number of shares of Common Stock that may be purchased by its exercise and
containing such other terms and conditions consistent with the Plan as the
Committee shall determine to be applicable to that particular Option.
(b) No Options shall be granted under the Plan on or after the tenth
annual anniversary of the date upon which the Plan was adopted by the Board of
Directors.
(c) No Option may be exercised prior to the expiration of one year after
its Grant Date.
(d) An Option shall expire by its terms at the expiration of the Option
Period and shall not be exercisable thereafter.
(e) The Committee may provide in the Option Agreement for the expiration
or termination of the Option prior to the expiration of the Option Period,
upon the occurrence of any event specified by the Committee.
(f) An Option shall not be transferable other than by will or the laws of
descent and distribution and, during the Grantee's lifetime, an Option shall
be exercisable only by the Grantee.
(g) Each individual Grantee shall agree in writing at the time of the
grant of any Option to continue in the employment of the Company (and/or one
or more of its Subsidiary Corporations) for one (1) year after the date on
which he was granted an Option (but neither the Company nor any of its
Subsidiary Corporations shall have any obligation to retain any Grantee in its
employment for any period).
(h) A person electing to exercise an Option shall give written notice of
such election to the Company, in such form as the Committee may require,
accompanied by payment in the manner determined by the Committee, of the full
purchase price of the shares of the Common Stock for which the election is
made. Payment of the purchase price shall be made in cash or in such other
form as the Committee may approve, including shares of Common Stock valued at
their Fair Market Value on the date of exercise of the Option.
(i) Notwithstanding the Option Period applicable to a Supplemental Stock
Option granted hereunder, such Supplemental Stock Option, to the extent that
it has not previously been exercised, shall terminate upon the earliest to
occur of (1) the expiration of the applicable Option Period as set forth in
the Option Agreement granting such Supplemental Stock, (2) the expiration of
the three months after the Grantee's Retirement, (3) the expiration of one
year after the Grantee ceases to be employed by the Company or any of its
Subsidiary Corporations due to Permanent Disability, (4) the expiration of
one year after the Grantee ceases to be employed by the Company or any of its
Subsidiary Corporations due to the death of the Grantee, or (5) the date the
Grantee ceases to be employed by the Company or any of its Subsidiary
Corporations for any reason other than Retirement, Permanent Disability, or
death.
(j) The exercise of any number of Stock Appreciation Rights granted under
an Option Agreement shall result in a simultaneous corresponding reduction in
the number of shares of Common Stock then available for purchase by exercise
of the related Supplemental Stock Option.
Section 2.3 Incentive Stock Option Requirements
(a) An Option designated by the Committee as an Incentive Stock Option is
intended to qualify as an "incentive stock option" within the meaning of
subsection (b) of Section 422 of the Code and shall satisfy, in addition to
the conditions of Section 2.2 above, the conditions set forth in this Section
2.3.
(b) The option price per share of Common Stock shall be equal to the Fair
Market Value of a share of Common Stock on the Grant Date, except as provided
in paragraph (c) immediately below.
(c) An Incentive Stock Option shall not be granted to an individual who,
on the Grant Date, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiary Corporations, unless the Committee provides in the Option Agreement
with any such individual that the option price per share of Common Stock will
not be less than 110% of the Fair Market Value of a share of Common Stock on
the Grant Date and the Option Period will not extend beyond five years from
the Grant Date.
(d) The aggregate Fair Market Value, determined on the Grant Date, of the
shares of the Common Stock with respect to which incentive stock options are
exercisable for the first time by any Grantee during any calendar year under
the Plan or under any other plan of the Company shall not exceed $100,000.
(e) Notwithstanding the Option Period applicable to an Incentive Stock
Option granted hereunder, such Incentive Stock Option, to the extent that it
has not been previously exercised, shall terminate upon the earliest to occur
of (1) the expiration of the applicable Option Period as set forth in the
Option Agreement granting such Incentive Stock Option, (2) the expiration of
three months after the Grantee's Retirement, (3) the expiration of one year
after the Grantee ceases to be employed by the Company or any of its
Subsidiary Corporations due to Permanent Disability, (4) the expiration of one
year after the Grantee ceases to be employed by the Company or any of its
Subsidiary Corporations due to the death of the Grantee, or (5) the date the
Grantee ceases to be employed by the Company or any of its Subsidiary
Corporations for any reason other than Retirement, Permanent Disability or
death.
ARTICLE III
Stock Appreciation Rights
Section 3.1 Grant of Rights.
(a) In conjunction with any Supplemental Stock Option granted hereunder,
the Committee may, in its discretion, grant a Stock Appreciation Right with
respect to each share of Common Stock which may be purchased by the exercise
of such Supplemental Stock Option.
(b) Upon exercise of a Stock Appreciation Right the Company shall pay
the amount by which the Fair Market Value of a share of Common Stock on the
date of exercise exceeds the Fair Market Value of a share of Common Stock on
the Grant Date, but only to the extent that such amount does not exceed 200%
of the Fair Market Value of a share of Common Stock on the Grant Date. A Stock
Appreciation Right may not be exercised unless the Fair Market Value of a
share of Common Stock on the date of exercise exceeds the Fair Market Value of
a share of Common Stock on the Grant Date.
(c) Payment upon exercise of a Stock Appreciation Right may be made, in
the discretion of the Committee, in (1) cash, (2) in shares of Common Stock
valued at Fair Market Value on the date of exercise, or (3) partly in cash and
partly in shares of Common Stock.
Section 3.2 Rights Requirements.
(a) Stock Appreciation Rights shall be granted under and evidenced by the
Option Agreement under which the related Supplemental Stock Option is granted,
containing such terms and conditions consistent with the Plan as the
Committee shall determine, and shall be exercisable to the extent allowed
under such terms and conditions.
(b) Stock Appreciation Rights granted in relation to a Supplemental Stock
Option (1) shall be exercisable only to the extent and only when the Option is
exercisable, (2) shall expire or otherwise terminate simultaneously with the
expiration or termination of the related Supplemental Stock Option, (3) shall
be transferable only when the related Supplemental Stock Option is
transferable and under the same conditions, (4) shall be exercised by the
Grantee giving written notice of such exercise to the Company, in such form as
the Committee may require, and (5) shall be reduced upon each exercise of the
related Supplemental Stock Option by the number of Stock Appreciation Rights
which corresponds to the number of shares of Common Stock purchased pursuant
to such exercise.
ARTICLE IV
Restricted Stock Award
Section 4.1 Grant of Awards
The Committee may, from time to time, subject to the provisions of the Plan,
grant Restricted Stock Awards to key employees under appropriate Restricted
Stock Agreements.
Section 4.2 Award Requirements.
(a) An award shall be evidenced by a Restricted Stock Agreement
specifying the number of shares of Common Stock that are awarded and
containing such terms and conditions consistent with the Plan as the Committee
shall determine to be applicable to that particular award, which agreement
shall contain in substance the following terms and conditions:
(1) Shares awarded pursuant to Restricted Stock Awards shall be subject
to such conditions, terms, and restrictions (including, for example,
continuation of employment by the Company or any of its Subsidiary
Corporations in the same or in a higher level position) and for such
Restriction Period or Periods as may be determined by the Committee.
(2) Shares awarded, and the right to vote such shares and to receive
dividends thereon, may not be sold, assigned, transferred, exchanged, pledged,
hypothecated, or otherwise encumbered, except as herein provided, during the
Restriction Period applicable to such shares; provided, that the Grantee
awarded Restricted Stock shall have the right to execute a proxy to vote the
Restricted Stock. Notwithstanding the foregoing, and except as otherwise
provided in the Plan, a Grantee awarded Restricted Stock shall have all the
other rights of a stockholder, including the right to receive dividends and
the right to vote such shares.
(3) Each certificate issued in respect of Common Stock awarded to a
Grantee shall be deposited with the Company, or its designee, or in the
Committee's discretion delivered to the Grantee, and shall bear an appropriate
legend noting the existence of restrictions upon the transfer of such Common
Stock.
(4) Each Restricted Stock Agreement shall specify the terms and
conditions upon which any restrictions upon shares awarded under the Plan
shall lapse, as determined by the Committee (including, for example,
employment by the Company or any of its Subsidiary Corporations in the same
or a higher level position at the end of the Restriction Period or occurrence
of change in control, as defined by the Committee from time to time, during
the Restriction Period). Upon lapse of such restrictions, shares of Common
Stock free of any restrictive legend, other than as may be required under
Article V hereof, shall be issued and delivered to the Grantee or his legal
representative.
(b) If a Grantee ceases to be employed by the Company or any of its
Subsidiary Corporations during a Restriction Period as a result of Retirement,
Permanent Disability, or death, the extent to which restrictions shall be
deemed to have lapsed shall be determined by the Committee by multiplying the
amount of the Restricted Stock Award by a fraction, the numerator of which is
the full number of calendar months such Grantee was employed during the
Restriction Period and the denominator of which is the total number of full
calendar months in the Restriction Period. If a Grantee ceases to be employed
by the Company or any of its Subsidiary Corporations for any reason other than
as described in the preceding sentence, the Grantee shall be deemed not to
have satisfied the restrictions associated with the Restricted Stock Award
unless the Committee determines otherwise in its sole discretion (in which
event the extent to which restrictions will be deemed to have lapsed shall not
exceed the amount determined pursuant to the preceding sentence).
ARTICLE V
General Provisions
Section 5.1 Adjustment Provisions
(a) Subject to paragraph (b) below, in the event of (1) any dividend
payable in shares of Common Stock; (2) any recapitalization, reclassification,
split-up, or consolidation of, or other change in, the Common Stock; or (3)
any exchange of the outstanding shares of Common Stock, in connection with a
merger, consolidation, or other Reorganization of or involving South Alabama
Bancorporation or a sale by South Alabama Bancorporation of all or a portion
of its assets, for a different number or class of shares of stock or other
securities of South Alabama Bancorporation or shares of the stock or other
securities of any other corporation; then the Committee shad, in such manner
as it shall determine in its sole discretion, appropriately adjust the number
and class of shares or other securities which shall be subject to Options,
Stock Appreciation Rights, and Restricted Stock Awards and/or the purchase
price per share which must be paid thereafter upon exercise of any Option and
which will be used to determine the amount which any Grantee would receive
upon exercise thereafter of Stock Appreciation Rights. Any such adjustment
made by the Committee shall be final, conclusive, and binding upon ad persons,
including, without limitation, the Company, its Subsidiary Corporations, the
shareholders and directors of the Company, and any persons having any
interest in any Options, Stock Appreciation Rights, or Restricted Stock Awards
which may be granted under the Plan.
(b) Subject to any required action by the shareholders, if the Company
shall be the surviving or resulting corporation in any merger, consolidation,
or other Reorganization, any Option, Stock Appreciation Right, or Restricted
Stock Award granted hereunder shall pertain to and apply to the securities to
which a holder of the number of shares of common stock subject to the Option,
Stock Appreciation Right, or Restricted Stock Award would be entitled on the
effective date of such merger or consolidation; but a dissolution or complete
liquidation of the Company ora merger, consolidation or other Reorganization
in which the Company is not the surviving or resulting corporation, shall
cause every Option, Stock Appreciation Right, and Restricted Stock Award
outstanding hereunder to terminate on the effective date of such dissolution,
complete liquidation, merger, consolidation, or other Reorganization;
provided, however, that the Company shall give not less than thirty (30) days'
written notice prior to the effective date of the said transaction to each
Grantee, who shall have the right to exercise his Option, Stock Appreciation
Right, and/or Restricted Stock Award during the thirty (30) day period
immediately preceding such effective date, as to all or any part of the shares
covered thereby, including, without limitation, shares as to which such
Option, Stock Appreciation Right, and/or Restricted Stock Award would not
otherwise be exercisable by reason of an insufficient lapse of time or that
the measuring year for the performance requirement had not then elapsed
(anything contained hereinabove to the contrary notwithstanding); and except
that the surviving or resulting bank, banking association, bank holding
company, or corporation may assume such Option, Stock Appreciation Right,
and/or Restricted Stock Award or tender an option or options to purchase its
shares on its terms and conditions, both as to the number of shares and
otherwise, and/or may tender such stock appreciation rights and/or restricted
stock awards as it deems appropriate, an in its absolute and uncontrolled
discretion.
(c) The term "Reorganization" as used in this Section means and refers to
any statutory merger, statutory consolidation, sale of all or substantially
all of the assets of the Company or its Corporate Subsidiaries, or sale of
securities of the Company or its Corporate Subsidiaries pursuant to which the
Company or its Corporate Subsidiaries becomes a subsidiary of and controlled
by, another corporation or is not the surviving or resulting corporation, all
after the effective date of the Reorganization.
(d) Except as provided in paragraph (a) immediately above, issuance by
the Company of shares of stock of any class of securities convertible into
shares of stock of any class shall not affect the Options, Stock Appreciation
Rights, or Restricted Stock Awards.
Section 5.2 Additional Conditions.
Any shares of Common Stock issued or transferred under any provision of
the Plan may be issued or transferred subject to such conditions, in addition
to those specifically provided in the Plan, as the Committee or the Company
may impose.
Section 5.3 No Rights as Shareholder or to Employment.
No Grantee or any other person authorized to purchase Common Stock upon
exercise of an Option shall have any interest in or shareholder rights with
respect to any shares of the Common Stock which are subject to any Option or
Stock Appreciation Rights until such shares have been issued and delivered to
the Grantee or any such person pursuant to the exercise of such Option.
Furthermore, the Plan shall not confer upon any Grantee any rights of
employment with the Company or one of its Subsidiary Corporations, including
without limitation any right to continue in the employ of the Company or one
of its Subsidiary Corporations, or affect the right of the Company or one of
its Subsidiary Corporations to terminate the employment of a Grantee at any
time, with or without cause.
Section 5.4 General Restrictions.
Each award under the Plan shall be subject to the requirement that, if at
any time the Committee shall determine that (a) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon
any securities exchange or under any state or federal law, or (b)the consent
or approval of any government regulatory body, or agreement by the recipient
of any award with respect to the disposition of shares of Common Stock, is
necessary or desirable as a condition of, or in connection with, the granting
of such award or the issue or purchase of shares of Common Stock thereunder,
such award may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval, or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee. A
participant shall agree, as a condition of receiving any award under the Plan,
to execute any documents, make any representations, agree to restrictions on
stock transferability, and take any actions which in the opinion of legal
counsel to the Company are required by any applicable law, ruling, or
regulation. The Company is in no event obligated to register any such shares,
to comply with any exemption from registration requirements or to take any
other action which may be required to order to permit, or to remedy or remove
any prohibition or limitation on, the issuance or sale of such shares to any
Grantee or other authorized person.
Section 5.5 Conflict with Applicable Law.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 (the "1934 Act"), transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under
the 1934 Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
Section 5.6 Rights Unaffected.
The existence of the Options, Stock Appreciation Rights, and Restricted
Stock Awards shall not affect: (1) the right or power of the Company or its
shareholders to make adjustments, recapitalizations, reorganizations, or other
changes in the Company's capital structure or its business; (2) any issue of
bonds, debentures, preferred or prior preference stocks affecting the Common
Stock or the rights thereof; (3) the dissolution or liquidation of the Company
or any of its Subsidiary Corporations, or the sale or transfer of any part of
all of the assets or business of the Company or any of its Subsidiary
Corporations; or (4) any other corporate act, whether of a similar character
or otherwise.
Section 5.7 Withholding Taxes
As a condition of exercise of an Option or Stock Appreciation Right or
grant of a Restricted Stock Award, the Company may, in its sole discretion,
withhold or require the Grantee to pay or reimburse the Company for any taxes
which the Company determines are required to be withheld in connection with
the grant of a Restricted Stock Award or any exercise of an Option or Stock
Appreciation Right.
Section 5.8 Choice of Law.
The validity, interpretation, and administration of the Plan and of any
rules, regulations, determinations, or decisions made thereunder, and the
rights of any and all persons having or claiming to have any interest therein
or thereunder, shall be determined exclusively in accordance with the laws of
the State of Alabama.
Without limiting the generality of the foregoing, the period within which
any action in connection with the Plan must be commenced shall be governed by
the laws of the State of Alabama, without regard to the place where the act or
omissions complained of took place, the residence of any party to such action
or the place where the action may be brought or maintained.
5.9 Amendment, Suspension and Termination of Plan.
The Plan may, from time to time, be terminated, suspended, or amended by
the Board of Directors in such respects as it shall deem advisable including,
without limitation, in order that the Incentive Stock Options granted
hereunder shall be "incentive stock options" as such term is defined in
Section 422 of the Code, or to conform to any change in any law or regulation
governing same or in any other respect; provided, however, that no such
amendment shall change the following:
(a) The maximum aggregate number of shares for which Options, Stock
Appreciation Rights, and Restricted Stock Awards may be granted under the
Plan, except as required under any adjustment pursuant to Section 5.1
hereof;
(b) The Option exercise price, with the exception of any change in such
price required as a result of any adjustment pursuant to Section 5.1 hereof
and with the further exception of changes in determining the Fair Market Value
of shares of Common Stock to conform with any then applicable provision of the
Code or regulations promulgated thereunder;
(c) The maximum period during which Options or Stock Appreciation Rights
may be exercised;
(d) The maximum amount which may be paid upon exercise of a Stock
Appreciation Right;
(e) The termination date of the Plan in any manner which would extend
such date; or
(f) The requirements as to eligibility for participation in the Plan in
any material respect.
Notwithstanding any other provision herein contained, the Plan shall
terminate and all Options, Stock Appreciation Rights, and Restricted Stock
Awards previously granted shall terminate, in the event and on the date of
liquidation or dissolution of the Company unless such dissolution or
liquidation occurs in connection with a merger, consolidation or
reorganization of the Company to which Section 5.1 hereof applies.
APPENDIX B
AMENDMENT NUMBER TWO
TO SOUTH ALABAMA BANCORPORATION
1993 INCENTIVE COMPENSATION PLAN
The South Alabama Bancorporation 1993 Incentive Compensation Plan (the
"Plan") is hereby amended and modified as follows:
1. Section 1.3(a) is deleted in its entirety, and the following is
substituted in lieu thereof:
"The aggregate number of shares of Common Stock with respect to which
Options, Stock Appreciation Rights, and Restricted Stock Awards may be granted
shall not exceed 450,000 shares of Common Stock, subject to adjustment in
accordance with Section 5.1."
Except to the extent modified by the foregoing, the Plan shall remain in
full force and effect as originally adopted.
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed by its duly authorized officer this day of
, 1999.
South Alabama Bancorporation, Inc.
By: W. Bibb Lamar, Jr.
President and Chief Executive Officer
